340B saves hospitals an average $11.8M per year, report finds

Hospitals participating in the 340B drug discount program saved an average of $11.8 million per year, according to a new report from 340B Health.

For its annual report, released in June, the alliance of hospitals and health systems participating in the 340B drug-pricing program, last year surveyed more than 1,300 of its member hospitals to better understand the savings generated by the program and how providers are using their 340B savings.

The 340B program, signed into law in 1992, allows participating healthcare organizations to buy outpatient drugs at a discount. To participate, providers must show that they serve a large number of low-income, Medicaid, uninsured or underinsured populations.

Six key findings from the survey:

1. While 340B savings vary widely among hospitals, primarily due to size, the average annual savings was $11.8 million.

2. Among rural hospitals, 340B savings were much lower, averaging $2.2 million per year. More than 60 percent reported less than $1 million in annual savings.

3. Hospitals reported spending $100,000 to $200,000 on 340B compliance costs. Most facilities had an average of two full-time employees overseeing the program.

4. Most hospitals, 95 percent, said they use 340B savings to support uncompensated care. Ninety percent of hospitals said they use savings to support patient care, including clinical and pharmacy services.

5. There are key differences between the uses of 340B savings between disproportionate share and rural hospitals. Seventy-two percent of disproportionate share hospitals reported using their savings to offset low reimbursement from Medicaid. Ninety-three percent of rural hospitals said they used 340B savings to keep their doors open.

6. Nearly 67 percent of hospitals said that a loss in 340B savings would reduce their ability to provide uncompensated care. About 82 percent reported that a loss would hinder their ability to offer morel patient services.

Read the full report here.

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